Egypt’s OCI falls to 3-month low on tax dispute woes

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Egypt’s Orascom Construction Industries (OCI) fell to a near three-month low on Thursday on worries of an extended tax dispute with the government, weighing on the bourse, while Gulf markets closed mixed ahead of the weekend.

Investors are concerned that OCI’s buyout offer from its Dutch subsidiary will not go through as the company is embroiled in a tax charge.

OCI has held two meetings this week with the Egyptian Tax Authority, with no conclusive results. Another meeting is planned for March 17, sources said. Its employees protested on Wednesday against the tax charges.

Shares in OCI fell 5 percent to the lowest level since Dec.6, taking losses to 11.6 percent since the public prosecutor banned OCI’s Chief Executive, Nassef Sawiris, from travel as part of the tax evasion investigation.

Amsterdam-listed fertilizer firm OCI NV made a tender offer in January to buy out all outstanding OCI shares.

“OCI’s mandatory offer deal is wound up with issues such as the tax case, which are complicating the tender offer,” said a Cairo-based analyst. “It seems fairly likely OCI won’t get it approved anytime soon. This will remain an overhang.”

The negative sentiment spilled over to other blue chips, who came under selling pressure from foreign investors.

Commercial International Bank and Orascom Telecom each slipped 2.3 percent.

Egypt’s benchmark retreated 2.1 percent, also hitting a three-month low.

Elsewhere, Dubai’s bourse declined 0.3 percent, down for a second session in the last six, but ended the week1.8 percent higher.

Emirates NBD dropped 4.7 percent, down from Wednesday’s 18-month high, after reaching its ex-dividend date. The lender will pay 0.25 dirhams as a cash dividend.

Courier Aramex and Dubai Financial Market slipped 1.3 and 0.9 percent respectively.

The market is up 18.1 percent already in 2013, but some traders believe it has further upside potential following nearly five years in the doldrums.

“Dubai is finally starting to price in fundamental improvements on the ground but it still has a way to go – some banks are trading at a discount to regional peers and other companies are not at fair value yet,” said Amer Khan, fund manager at Shuaa Asset Management.

Abu Dhabi’s benchmark advanced 0.7 percent, up for afifth consecutive session, taking gains for the week to 2percent. First Gulf Bank was the main support, rising 3percent.

Oman’s index also registered its fifth straight gain,finishing 0.4 percent higher. Of the top 12 shares by market value, only Oman Cement, which declined 4.6 percent, traded down.

Elsewhere, Doha’s index climbed 0.6 percent to a two-week high.

Gainers outnumbered losers 25 to four. Qatar Electricity and Water gained 3.4 percent, while Masraf Al Rayan and Industries Qatar both rose 0.8 percent.

Kuwait snapped a 13-session winning streak, although the measure ended marginally in the red, down 0.04 percent.